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Independence, MO —
Although city of Independence employees won’t experience three unpaid furlough days in the upcoming fiscal year, the proposed budget still faces challenges as revenues remain flat and services to residents must remain constant, City Manager Robert Heacock said.
“While we are beginning to see some improvement in the economy, recovery is slow,” Heacock wrote in a letter to the City Council, which held the first in a series of budget study sessions Monday night. “The small steps forward are not keeping pace with the increases in the cost of operations. While we can be optimistic about an economic rebound, there are other factors with a negative impact on governmental revenues (that) will not change even when the economy improves.”
As mandated by the City Charter, the proposed 2012-13 budget is balanced. Heacock said the city continues to experience several issues that affect its financial stability, such as a low balance in the city’s unassigned fund balance and continuing bond payments for The Falls at Crackerneck Creek development.
Like the current fiscal year, the city will need to pay a portion of the debt service for The Falls at Crackerneck Creek to protect its credit rating. The proposed budget includes $4,571,206 from the general fund and $221,272 from utility funds for these payments, which are made on Sept. 1 and March 1 of each year.
The unassigned fund balance – the “rainy day fund” – should include at least 5 percent of the city’s revenue, or roughly $3.7 million, as established by a City Council resolution.
However, the city is projected to have about $1.7 million in the fund at the start of the upcoming fiscal year. The fund is meant to cover unexpected emergencies or natural disasters, such as a snow or ice storm, or to make up the difference in projected versus actual project costs.
“I do not recommend going below this level,” Heacock wrote in his budget letter.
While no employee layoffs will take place this upcoming fiscal year, 89 positions will remain vacant through attrition or through last year’s layoffs.
The city’s projected general fund revenues for the next fiscal year are roughly $74.4 million, the majority of which comes from sales, property and utility franchise taxes.
Cities like Independence, Heacock said, are facing challenges in growing these revenues, especially because of technology. He cited the following examples facing Independence:
• INTERNET SALES: When consumers purchase clothes, books or music electronically rather than at a local retail storefront, the city of Independence doesn’t receive the sales tax revenue, Heacock said.
Although city of Independence employees won’t experience three unpaid furlough days in the upcoming fiscal year, the proposed budget still faces challenges as revenues remain flat and services to residents must remain constant, City Manager Robert Heacock said.
“While we are beginning to see some improvement in the economy, recovery is slow,” Heacock wrote in a letter to the City Council, which held the first in a series of budget study sessions Monday night. “The small steps forward are not keeping pace with the increases in the cost of operations. While we can be optimistic about an economic rebound, there are other factors with a negative impact on governmental revenues (that) will not change even when the economy improves.”
As mandated by the City Charter, the proposed 2012-13 budget is balanced. Heacock said the city continues to experience several issues that affect its financial stability, such as a low balance in the city’s unassigned fund balance and continuing bond payments for The Falls at Crackerneck Creek development.
Like the current fiscal year, the city will need to pay a portion of the debt service for The Falls at Crackerneck Creek to protect its credit rating. The proposed budget includes $4,571,206 from the general fund and $221,272 from utility funds for these payments, which are made on Sept. 1 and March 1 of each year.
The unassigned fund balance – the “rainy day fund” – should include at least 5 percent of the city’s revenue, or roughly $3.7 million, as established by a City Council resolution.
However, the city is projected to have about $1.7 million in the fund at the start of the upcoming fiscal year. The fund is meant to cover unexpected emergencies or natural disasters, such as a snow or ice storm, or to make up the difference in projected versus actual project costs.
“I do not recommend going below this level,” Heacock wrote in his budget letter.
While no employee layoffs will take place this upcoming fiscal year, 89 positions will remain vacant through attrition or through last year’s layoffs.
The city’s projected general fund revenues for the next fiscal year are roughly $74.4 million, the majority of which comes from sales, property and utility franchise taxes.
Cities like Independence, Heacock said, are facing challenges in growing these revenues, especially because of technology. He cited the following examples facing Independence:
• INTERNET SALES: When consumers purchase clothes, books or music electronically rather than at a local retail storefront, the city of Independence doesn’t receive the sales tax revenue, Heacock said.
“It wasn’t that long ago that we didn’t have the ability to do those types of transactions, but more and more, people are moving in that direction,” he said. “That’s definitely something that impacts us, and we see evidence that a lot of our stores are becoming the place where people will window-shop, but not necessarily make that final purchase.”
• WIRELESS SERVICES: Movies or TV shows may now be watched on our televisions or cell phones without plugging into a land line. Municipalities like Independence continue to question whether wireless telephone and TV service should be taxed like traditional services – if not, revenues to the city will decrease, Heacock said.
“To cities, a phone is a phone...,” he said.
• ENERGY CONSERVATION: While it’s good for the environment, conservation through using less electricity and water or through more efficient appliances negatively impacts franchise tax revenues to the city.
“We encourage people to conserve,” Heacock said, “but unfortunately, you still have a lot of the fixed costs that we have to pay for.”
Additional budget study sessions are planned for the next several weeks, including one this Wednesday evening on the Police and Fire departments. A public hearing on the budget is scheduled as part of next Monday’s regular council meeting. The council will vote on the budget June 18, and it takes effect July 1.
Effective Jan. 1, 2013, city employees will likely experience a 3 percent increase each in health care and dental insurance premiums. This also marks the third fiscal year in which general city employees will go without a cost-of-living pay increase.
“I want to commend you and your staff for preparing this, but I don’t think any of us like it,” District 3 Council Member Myron Paris said to Heacock following his budget overview. “We still have a number of city employees who haven’t had raises ... and I know you hate it. I hate it immensely. I know we’ve talked about it quite a bit. It’s just one of those things with this job – it has its good points and its bad points, and this is one of the bad points.”
